Parolin has been on many people's shortlists for the job since Francis became pope in March and signaled that he would shake things up, said Allen. The cleric has more than a quarter-century's experience in the Vatican's diplomatic service and is seen as one of the brightest of his generation.

"By naming a consummate insider, Francis appears to want to 'reboot' the Vatican's operating system back to a point when it was perceived to operate efficiently, rather than scrapping it entirely," said Allen.

"The pick has been keenly anticipated, given that frustration with perceived breakdowns in governance under Bertone was part of what led the cardinals in March to elect a Latin American outsider to the papacy, handing him a clear reform mandate. Parolin now profiles as a key figure in that effort."

Francis has already taken a number of steps to try to reform the Curia, the Vatican administration, since his election.

In July, he set up an expert committee to recommend reforms to the economic and administrative structures of the Holy See. He's also ordered more scrutiny of the Vatican bank, which has been plagued by financial scandals for years.